Working Paper: NBER ID: w15055
Authors: Joshua L. Rosenbloom; William A. Sundstrom
Abstract: In much economic analysis it is a convenient fiction to suppose that changes over time in wages and employment are determined by shifts in supply or demand within a more or less competitive market framework Indeed, this framework has been effectively deployed to understand many episodes in American economic history. We argue here, however, that by minimizing the role of labor-market institutions such an approach is incomplete. Drawing on the history of American labor markets over two centuries, we argue that institutions--by which we mean both formal and informal rules that constrain the choices of economic agents--have played a significant role in the determination of wages, employment and other market outcomes over time. The historical evolution of American labor markets can best be characterized as a sequence of relatively stable arrangements punctuated by shifts in institutional regimes. Our narrative emphasizes the importance of understanding the historically contingent role of institutional regimes in conditioning the operation of supply and demand in empirical and policy analysis of the labor market.
Keywords: No keywords provided
JEL Codes: J01; J18; N3; N31; N32; N4; N41; N42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| labor market institutions (J08) | wages (J31) |
| labor market institutions (J08) | employment (J68) |
| changes in institutional regimes (O17) | shifts in labor market outcomes (J49) |
| shifts in institutional regimes (P39) | operation of supply and demand (J20) |
| changes in property rights and labor market institutions (J08) | economic outcomes (F61) |
| institutional regimes (F55) | path dependencies (Y80) |
| institutional regimes (F55) | technological evolution (O33) |
| institutional regimes (F55) | labor market dynamics (J29) |